tempus fugit

WaPo editorial: Adam Smith: a balance of trade “deficit” is not disadvantage, let alone a debt to be repaid or money stolen from us

2018-08-24

A Washington Post editorial that explains just how wrong Trump’s tariffs are was recently published, and as I have taken advantage of their discount to subscribe, I have had the opportunity to scroll through their recent editorials. Here is a quote from a piece about tariffs:

Unless Trump wants to retreat to a 1776-sized economy or relive the Great Depression (care of Smoot-Hawley) it’s best we not follow the outdated mercantilist philosophy that was supplanted fortunately by Adam Smith who deplored tariffs (“extraordinary restraints upon the importation of almost all sorts of goods from those countries with which the balance of trade is supposed to be disadvantageous”). Unlike Trump, Smith knew that a balance of trade “deficit” is not disadvantage, let alone a debt to be repaid or money stolen from us:

Nothing … can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded.
When two places trade with one another, this doctrine supposes that, if the balance be even, neither of them either loses or gains; but if it leans in any degree to one side, that one of them loses and the other gains in proportion to its declension from the exact equilibrium. Both suppositions are false. A trade which is forced by means of bounties and monopolies may be and commonly is disadvantageous to the country in whose favour it is meant to be established, as I shall endeavour to show hereafter. But that trade which, without force or constraint, is naturally and regularly carried on between any two places is always advantageous, though not always equally so, to both.

Trump’s zero-sum economics is wrong, and as we see, harmful to America. (“From Wisconsin to South Carolina, small businesses are starting to lay off employees, and they’re citing Trump’s tariffs. Many firms have warned that the worst is yet to come.”)

So we have a president who is so wrong-headed that he chooses to undo all the economic progress since Adam Smith explained the wrongness of the “balance of trade” almost 250 years ago. We might as well try to rewrite the Constitution as to revisit Adam Smith’s reforms. Oh, wait, we’re going to rewrite the Constitution from scratch, aren’t we? (See the hidden push to convene a Constitutional Convention by right-wing radicals…)

(image courtesy of pixabay.com)

(this bit was supposed to have been published 8/20/2018 but was unaccountably held up.)